Correlation Between Glg Intl and Qs Small

Can any of the company-specific risk be diversified away by investing in both Glg Intl and Qs Small at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Glg Intl and Qs Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Glg Intl Small and Qs Small Capitalization, you can compare the effects of market volatilities on Glg Intl and Qs Small and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Glg Intl with a short position of Qs Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glg Intl and Qs Small.

Diversification Opportunities for Glg Intl and Qs Small

0.79

Correlation Coefficient

Glg Intl  Qs Small

Poor diversification

The 3 months correlation between Glg and LMBMX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Qs Small Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Small Capitalization and Glg Intl is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Glg Intl Small are associated (or correlated) with Qs Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Small Capitalization has no effect on the direction of Glg Intl i.e., Glg Intl and Qs Small go up and down completely randomly.

Pair Corralation between Glg Intl and Qs Small

Assuming the 90 days horizon Glg Intl is expected to generate 1.09 times less return on investment than Qs Small. But when comparing it to its historical volatility, Glg Intl Small is 1.39 times less risky than Qs Small. It trades about 0.22 of its potential returns per unit of risk. Qs Small Capitalization is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,309  in Qs Small Capitalization on September 8, 2024 and sell it today you would earn a total of  186.00  from holding Qs Small Capitalization or generate 14.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Glg Intl Small  vs.  Qs Small Capitalization

Glg Intl Small

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Glg Intl Small are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Glg Intl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Qs Small Capitalization

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Small Capitalization are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Qs Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glg Intl and Qs Small

The main advantage of trading using opposite Glg Intl and Qs Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl position performs unexpectedly, Qs Small can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Qs Small will offset losses from the drop in Qs Small's long position.

The idea behind Glg Intl Small and Qs Small Capitalization pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.